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CME: August Prices Received for Corn Lower Than Previous Year

02 October 2018

US - USDA NASS released the monthly "Agricultural Prices" report on Thursday drawing a close to the 2017/2018 marketing year prices received for corn and soybeans, reports Steiner Consulting Group, DLR Division, Inc.

August prices received for corn came in at $3.36 per bushel, nine cents below August of 2017. This rounded out the marketing year to $3.40/bu (simple average of the monthly reported corn prices), only three cents higher than last year.

Soybeans on the other hand, were $0.65 lower in August of 2018 than in August of 2017, factoring in trade and heavy production anticipated in the following marketing year. August soybean prices received by farmers were listed at $8.59 per bushel. The first monthly average soybean price reported below $9 per bushel since March 2016.

The nearby soybean futures on the other hand has closed below $9 per bushel everyday since the middle of June, with exception of 31 July 2018. Cash prices reported in the weekly Illinois processing report have also been below $9/ bushel (using Thursday quotes) in since the middle of June as well.

These futures prices have led cash prices for much of he month of August, but in the later half of the month the weekly futures remained above $8 while cash tumbled below. The weighted average price reported for the month of August would suggest that farmers are holding onto soybeans and selling limited volumes at sub-$8 per bushel prices.

 

This was confirmed in the latest grain stocks report that was released Friday. As of 1 September, old crop soybeans stored on farms were up 15 per cent compared to a year ago, while off farm stocks registered 58 per cent above a year ago. This is the largest ending stocks number since 2006.

Now, this story has been similar all year. Soybean stocks on 1 March were up 21 per cent, followed by a 1 June figure of 26 per cent larger than the prior year. Soybean production was 2.2 per cent larger year-over-year in 2017/18, and with exports off from trade struggles rising stock levels are of little surprise.

The impending large soybean crop harvested for the 2018/19 crop year is expected to roughly double ending stocks carryout from 2017/18 figures. In large part because production is estimated to rise another 4.4 per cent. Exports remain uncertain at best for the next marketing year but high stock levels and large production figures are likely to continue to pressure prices.

USDA in the latest WASDE estimated season average price for 2018/19 between $7.65 and $10.15 per bushel. Given the new information in the stocks report, this price range looks to be an optimistic outlook for soybeans.

Corn stocks were also slightly larger than expected at 2.1 billion bushels, but still 7 per cent down from a year ago. The last time the US had two consecutive years of carry-over surpassing 2 billion bushels was the 1987/88 marketing year.


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